INSURANCE GLOSSARY:
COMMON INSURANCE TERMS
ACCIDENTAL DEATH & DISMEMBERMENT (AD&D)
Provides a benefit if a covered accident results in death or a specified serious loss, such as loss or loss of use of a limb, sight, hearing or speech. Coverage, benefits and exclusions vary by policy. AD&D is generally supplemental to, rather than a replacement for, life insurance.
BENEFICIARY
The person, organization or other eligible entity named to receive insurance proceeds when a benefit becomes payable, such as the death benefit under a life insurance policy.
BENEFIT AMOUNT
The amount an insurance policy may pay when a covered event occurs, subject to the policy terms, eligibility requirements, limits and exclusions. The benefit amount may be paid as a lump sum or through periodic payments, depending on the type of insurance.
CASH VALUE
An amount that may build within certain permanent life insurance policies. Depending on the policy, the owner may be able to access some of this value through withdrawals or loans, which may affect the policy benefits and have tax implications.
CONVERTIBLE TERM INSURANCE
Term life insurance that includes an option to convert some or all of the coverage to eligible permanent life insurance without providing new evidence of insurability, subject to the policy’s conversion rules and time limits.
DEATH BENEFIT
The amount payable under a life insurance policy when the insured person dies while the policy is in force. The benefit is generally paid to the designated beneficiary, subject to the policy terms.
EMERGENCY MEDICAL COVERAGE
Travel insurance coverage that may help pay eligible medical expenses resulting from an unexpected illness or injury while travelling outside your home province or country, subject to the policy’s limits and exclusions.
EVIDENCE OF INSURABILITY
Health, medical or other information an insurer may require when assessing eligibility for insurance coverage. This may include health questions, medical records or an examination, depending on the coverage being requested.
EXCLUSIONS
Conditions, events, circumstances or risks that an insurance policy specifically does not cover. Exclusions vary by policy and should be reviewed before coverage is purchased.
GROUP INSURANCE
Insurance coverage arranged for members of a defined group, commonly through an employer or association. Depending on the plan, coverage may include life, health, disability, critical illness or AD&D insurance.
GUARANTEED ISSUE INSURANCE
Insurance that provides acceptance without traditional medical underwriting, subject to the product’s eligibility requirements. Coverage amounts, premiums, exclusions and benefit limitations may differ from fully underwritten insurance.
LIFE INSURANCE
A contract that provides a death benefit if the insured person dies while the coverage is in force. Life insurance may be term, providing protection for a specified period, or permanent, providing lifelong coverage subject to the policy terms. A death benefit paid directly to a named beneficiary is generally received tax-free.
LIVING BENEFITS
Insurance benefits designed to provide financial support to an insured person during their lifetime. Disability insurance and critical illness insurance are common examples of living-benefit coverage.
NON-MEDICAL LIFE INSURANCE
Life insurance that does not require a medical examination. Depending on the product, applicants may still need to answer health questions, and coverage amounts, eligibility and premiums may differ from fully underwritten insurance.
OWN OCCUPATION COVERAGE
A disability insurance provision or rider that may allow an insured person to continue qualifying as totally disabled when unable to perform their own occupation, even if they are able to work in another occupation, subject to the policy terms.
POLICYHOLDER / POLICYOWNER
The individual or organization that owns the insurance policy and holds the contractual rights and responsibilities associated with it. The policyowner may be different from the insured person or beneficiary.
PREMIUM
The amount paid to an insurer for insurance coverage. Premiums may be payable monthly, annually or according to another schedule specified in the policy.
RENEWABLE TERM INSURANCE
Term life insurance that allows coverage to continue after the initial term through renewal, subject to the policy terms. Renewal may not require new medical evidence, although premiums generally increase as the insured becomes older.
RETURN OF PREMIUM
An optional insurance feature or rider that may return some or all eligible premiums when specified conditions are met. The amount returned, timing and eligibility requirements depend on the particular policy or rider.
RIDER
An optional provision added to an insurance policy that provides additional or modified coverage. Riders may involve additional premiums, eligibility requirements or underwriting.
SURRENDER VALUE
The amount a policyowner may receive when cancelling certain permanent life insurance policies that have accumulated cash value, after applicable loans, charges or other amounts are deducted. Tax consequences may apply.
SURVIVORSHIP (JOINT LAST-TO-DIE)
A joint life insurance arrangement covering two people where the death benefit is generally paid after the second insured person dies. It is often used for estate-planning needs, subject to the policy terms.
SURVIVAL PERIOD
The period an insured person must survive after diagnosis of a covered critical illness before the benefit becomes payable. The required period varies by condition and policy.
TERMINAL ILLNESS BENEFIT
A benefit that may allow an insured person diagnosed with a qualifying terminal illness to receive an advance of part of the life insurance benefit while still living, subject to the policy’s eligibility requirements and limits.
TOTAL DISABILITY
A disability classification used to determine eligibility for disability benefits. The exact definition varies by policy and may initially relate to the insured person’s regular occupation and later to their ability to perform another suitable occupation.